12 unchanged sentences
• We rely on a limited number of third-party suppliers and manufacturers for our products, and a loss of any one of them could negatively affect our business.
−Removed: If we are unable to successfully manage any of our recent or future acquisitions and integrations of businesses, our results of operations may be materially and adversely affected.
−Removed: The occurrence of health epidemics, pandemics and similar outbreaks, such as the COVID-19 pandemic, could adversely affect our business.
+Added: • We may not successfully manage the transition of leadership to our new Chief Executive Officer, which could have an adverse impact on us.
Risks Related to Legal and Regulatory Matters
33 unchanged sentences
• disagreements with suppliers, manufacturers, or logistics partners as to quality control, leading to a surplus of ineffective products;
+Added: • the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds;
• misappropriation of our intellectual property;
4 unchanged sentences
• changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and partners are located;
−Removed: the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds;
• insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
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An ongoing shortage of semiconductors or other key components can disrupt our production schedule and have an adverse effect on our business, profitability and results of operations.
−Removed: Certain of our products are currently subject to tariffs, changes in trade policies, additional tariffs, or labor shortages could make delivery of supplies more expensive and time consuming, leading to increased expenses and delays in shipments.
−Removed: These potential delays and cost increases could have an adverse effect on our business, financial condition, and operations results.
+Added: Certain of our products are currently subject to tariffs, changes in trade policies or labor shortages, which could make delivery of supplies more expensive.
+Added: For example, the new U.S.
+Added: presidential administration has imposed additional tariffs on imports into the United States from Canada, China and Mexico, which could lead to increased expenses and delays in shipments.
+Added: These potential delays and cost increases could have an adverse effect on our business, financial condition, and operating results.
We depend on third-party suppliers and manufacturers and partners for our products and services.
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Accordingly, a loss of any of our significant suppliers, manufactures, or logistics partners could have an adverse effect on our business, financial condition, and operating results.
+Added: The loss of one or more key members of our management team or personnel, or our failure to attract, integrate and retain additional personnel in the future, could harm our business and negatively affect our ability to successfully grow our business.
+Added: We are highly dependent upon the continued service and performance of the key members of our management team and other personnel.
+Added: The loss of any of these individuals, each of whom is “at will” and may terminate his or her employment relationship with us at any time, could disrupt our operations, harm our business, and significantly delay or prevent the achievement of our business objectives.
+Added: We believe that our future success will also depend in part on our continued ability to identify, hire and integrate, train, and motivate qualified personnel.
+Added: We may be unable to attract and retain suitably qualified individuals who are capable of meeting our growing operational, managerial and other requirements, or we may be required to pay increased compensation in order to do so.
+Added: Our failure to attract, hire, integrate, and retain qualified personnel could impair our ability to achieve our business objectives.
+Added: We may not successfully manage the transition of leadership to our new Chief Executive Officer, which could have an adverse impact on us.
+Added: On February 24, 2025, Michael Shane Paladin became our new Chief Executive Officer.
+Added: Our new Chief Executive Officer will be critical to executing on our evolving business strategy.
+Added: Our success will depend, in part, on the effectiveness of this transition, including the successful integration into his role and the continuity of leadership among the larger workforce.
+Added: If we do not successfully manage this transition, it could be viewed negatively by our customers, employees, investors, and other third-party partners and could have an adverse impact on our business, results of operations, or our stock price.
+Added: Paladin is unsuccessful at leading the management team or is unable to articulate and execute our strategy and vision, we may not be able to achieve our financial and operational goals, which could adversely affect our business and results of operations.
+Added: We make estimates relating to customer demand and errors in our estimates may have negative effects on our inventory levels, revenues, and results of operations.
+Added: We have historically entered into agreements to place firm orders for products from our suppliers to ensure that we are able to meet our customers’ demands.
+Added: Our sales process requires us to estimate the expected customer demand and place firm product orders accordingly.
+Added: If we overestimate customer demand, we may allocate resources to products that we may not be able to sell when we expect or at all.
+Added: As a result, we may have excess inventory which could increase our net losses.
+Added: Conversely, if we underestimate customer demand, we may lose revenue opportunities and market share and may damage our customer relationships.
+Added: We rely on assumptions and estimates to calculate certain of our key operating metrics, and real or perceived inaccuracies in such metrics could adversely affect our reputation and our business.
+Added: We rely on assumptions and estimates to calculate certain of our key operating metrics, such as Units Deployed and New Units Deployed, Units Booked, and ARR.
+Added: Our key operating metrics are not based on any standardized industry methodology and are not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies.
+Added: Similarly, our key operating metrics may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology.
+Added: The numbers that we use to calculate Units Deployed and New Units Deployed, Units Booked, and ARR are based on internal data.
+Added: While these numbers are based on what we believe to be reasonable judgments and estimates for the applicable period of measurement, there are inherent challenges in measuring usage.
+Added: We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.
+Added: If investors or analysts do not perceive our metrics to be accurate representations of our business, or if we discover material inaccuracies in our metrics, our business would be harmed.
If we are unable to develop new products and solutions, adapt to technological change, sell our products and solutions into new markets, or further penetrate our existing markets, our revenue may not grow as expected.
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The success of any enhancement or new product or solution depends on several factors, including the timely completion, introduction and market acceptance of enhanced or new products and solutions, the ability to maintain and develop relationships with partners and vendors, the ability to attract, retain and effectively train sales and marketing personnel, the effectiveness of our marketing programs, and the ability of our products and solutions to maintain compatibility with a wide range of connected devices.
+Added: Because we derive a significant portion of our revenue from Hardware and Hosted Services, any material decline in Hardware sales, such as sales of our Hub Devices, or material decline in customers with subscriptions to our Hosted Services, would have a pronounced impact on our future revenue and operating results.
Any new product or solution we develop or acquire may not be introduced in a timely or cost-effective manner and may not achieve the broad market acceptance necessary to generate significant revenue.
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Further, new regulations may cause our customers and potential customers to redirect capital expenditures to meet the requirements of such regulations.
−Removed: For example, some of our customers have indicated that they are delaying the deployment of our solutions in certain communities and are directing more of their capital expenditures to solar systems to meet Environmental, Social, and Governance ("ESG") requirements - thus reducing our short-term revenue expectations.
+Added: For example, some of our customers have indicated that they are delaying the deployment of our solutions in certain communities and are directing more of their capital expenditures to solar systems to meet ESG requirements - thus reducing our short-term revenue expectations.
Our ability to expand the sales of our products and solutions into this market and new markets depends on several factors, including the reputation and recognition of our products and solutions, the timely completion, introduction and market acceptance of our products and solutions, the ability to attract, retain and effectively train sales and marketing personnel, the effectiveness of our marketing programs, the costs of our products and solutions and the success of our competitors.
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Due to the foregoing factors, and the other risks discussed in this Report, you should not rely on quarter-over-quarter and year-over-year comparisons of our operating results as an indicator of our future performance.
−Removed: Our limited operating history, recent growth and the quickly changing markets in which we operate make evaluating our current business and future prospects difficult, which may increase the risk of investing in our Class A Common Stock.
−Removed: We have experienced rapid growth since our formation.
−Removed: For example, our revenue in 2023 was more than 40% higher than 2022.
+Added: Our limited operating history and the quickly changing markets in which we operate make evaluating our current business and future prospects difficult, which may increase the risk of investing in our Class A Common Stock.
We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing markets.
If our assumptions regarding these uncertainties are incorrect or change in reaction to changes in our markets, or if we do not manage or address these risks successfully, our results of operations could differ materially from our expectations, and our business could suffer.
−Removed: Our growth has placed and may continue to place significant demands on our management, and our operational and financial infrastructure.
−Removed: As our operations grow in size, scope, and complexity, we will need to increase our sales and marketing efforts and add additional sales and marketing personnel and senior management in various regions worldwide and improve and upgrade our systems and infrastructure to attract, service, and retain an increasing number of customers.
−Removed: For example, we plan to extend our offerings to current customers by introducing new software, services, and products and may explore opportunities for international expansion.
+Added: We plan to extend our offerings to current customers by introducing new software, services, and products and may explore opportunities for international expansion.
The expansion of our systems and infrastructure will require us to commit substantial financial, operational, and technical resources in advance of an increase in the volume of business, with no assurance that the volume of business will increase.
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For example, in 2020 and 2021 we identified a deficiency with batteries contained in certain hardware sold which we acquired from a supplier.
−Removed: As of December 31, 2023 we've accrued $864,000 in hardware cost of goods sold on the Consolidated Statements of Operations related to the battery deficiencies.
+Added: As of December 31, 2023 we accrued $864,000 in hardware cost of goods sold on the Consolidated Statements of Operations related to the battery deficiencies.
+Added: During the year ended December 31, 2024, we determined the battery replacements were complete and released the remaining warranty accrual of $864,000 related to the battery deficiency.
Although we maintain product and general liability insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all such potential claims.
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We may be unable to attract new customers and maintain customer satisfaction, which could have an adverse effect on our business and growth.
−Removed: We have experienced significant customer growth over the past several years and now have 593 customers as of December 31, 2023.
+Added: We have experienced significant customer growth over the past several years and now have over 650 customers as of December 31, 2024.
Our continued business and revenue growth are dependent on our ability to continuously attract and retain customers, and we cannot be sure that we will be successful in these efforts, or that customer retention levels will not materially decline.
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Our customers have no obligation to renew their contracts for our software services after the expiration of the initial term.
−Removed: Our contract terms range from one month to eight years, and our average contract term is 1.6 years.
+Added: Our recurring revenue contract terms range from one month to ten years and the weighted average length of our recurring revenue contracts is 4.4 years.
In the event that these customers do renew their contracts, they may choose to renew for fewer units, shorter contract lengths, or for less expensive subscriptions.
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Customer attrition, as well as reductions in the number of units for which a customer subscribes, each could have a significant impact on our results of operations, as does the cost we incur in our efforts to retain our customers and encourage them to upgrade their services and increase the number of their units that use our software, services, and products.
−Removed: Our attrition rate could increase in the future if customers are not satisfied with our products and solutions, the value proposition of our solutions or our ability to otherwise meet their needs and expectations.
+Added: Our attrition rate could increase in the future if customers are not satisfied with our products and solutions, the support we provide related to our solutions, the value proposition of our solutions or our ability to otherwise meet their needs and expectations.
Customer attrition and reductions in the number of units may also increase due to factors beyond our control, including the failure or unwillingness of customers to pay for our products and solutions due to financial constraints and the impact of a slowing economy or higher interest rates.
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In addition, such increased costs could cause us to increase our rates, which could increase our attrition rate.
−Removed: The markets in which we participate could become more competitive as many companies, including large technology companies, managed service providers and WiFi providers, may target the markets in which we do business.
+Added: The markets in which we participate could become more competitive as many companies, including large technology companies, managed service providers and internet service, security and WiFi providers, may target the markets in which we do business.
If we are unable to compete effectively with these potential competitors and sustain pricing levels for our products and solutions, our revenue and profitability could be adversely affected.
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If we fail to promote and maintain our brand, our business could be materially and adversely affected.
−Removed: The loss of one or more key members of our management team or personnel, or our failure to attract, integrate and retain additional personnel in the future, could harm our business and negatively affect our ability to successfully grow our business.
−Removed: We are highly dependent upon the continued service and performance of the key members of our management team and other personnel.
−Removed: The loss of any of these individuals, each of whom is “at will” and may terminate his or her employment relationship with us at any time, could disrupt our operations, harm our business, and significantly delay or prevent the achievement of our business objectives.
−Removed: We believe that our future success will also depend in part on our continued ability to identify, hire, train, and motivate qualified personnel.
−Removed: We may be unable to attract and retain suitably qualified individuals who are capable of meeting our growing operational, managerial and other requirements, or we may be required to pay increased compensation in order to do so.
−Removed: Our failure to attract, hire, integrate, and retain qualified personnel could impair our ability to achieve our business objectives.
−Removed: We make estimates relating to customer demand and errors in our estimates may have negative effects on our inventory levels, revenues, and results of operations.
−Removed: We have historically entered into agreements to place firm orders for products from our suppliers to ensure that we are able to meet our customers’ demands.
−Removed: Our sales process requires us to estimate the expected customer demand and place firm product orders accordingly.
−Removed: If we overestimate customer demand, we may allocate resources to products that we may not be able to sell when we expect or at all.
−Removed: As a result, we may have excess inventory which could increase our net losses.
−Removed: Conversely, if we underestimate customer demand, we may lose revenue opportunities and market share and may damage our customer relationships.
−Removed: We rely on assumptions and estimates to calculate certain of our key operating metrics, and real or perceived inaccuracies in such metrics could adversely affect our reputation and our business.
−Removed: We rely on assumptions and estimates to calculate certain of our key operating metrics, such as Units Deployed and New Units Deployed, Units Booked, and ARR.
−Removed: Our key operating metrics are not based on any standardized industry methodology and are not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies.
−Removed: Similarly, our key operating metrics may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology.
−Removed: The numbers that we use to calculate Units Deployed and New Units Deployed, Units Booked, and ARR are based on internal data.
−Removed: While these numbers are based on what we believe to be reasonable judgments and estimates for the applicable period of measurement, there are inherent challenges in measuring usage.
−Removed: We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.
−Removed: If investors or analysts do not perceive our metrics to be accurate representations of our business, or if we discover material inaccuracies in our metrics, our business would be harmed.
−Removed: Our ability to use net operating loss carryforwards may be subject to limitations.
−Removed: As of December 31, 2023, we had approximately $204.6 million of gross federal net operating loss carryforwards available to reduce future taxable income.
−Removed: Realization of any tax benefit from our carryforwards is dependent on our ability to generate future taxable income and the absence of certain “ownership changes.” An “ownership change,” as defined in the applicable federal income tax rules, could place significant limitations, on an annual basis, on the amount of our future taxable income that may be offset by our carryforwards.
−Removed: Such limitations could effectively eliminate our ability to utilize a substantial portion of our carryforwards.
−Removed: We have not conducted a study to determine whether an “ownership change” has occurred since December 31, 2021 or if (i) the Business Combination resulted in an “ownership change,” (ii) we have incurred one or more “ownership changes,” or (iii) the issuance of shares of our Class A Common Stock resulted in an “ownership change.” Other issuances of shares of our Class A Common Stock which could cause an “ownership change” include the issuance of shares of common stock upon future conversion or exercise of outstanding options and warrants or future common stock offerings.
−Removed: If we have experienced or do experience an ownership change at any time since our formation, use of our net operating loss carryforwards and any other tax attribute carryforwards we may have (e.g., carryforwards of general business credits) would be subject to an annual limitation under Section 382 or 383 of the Internal Revenue Code of 1986, as amended, or the Code.
−Removed: Such a limitation would be determined by first multiplying the value of our outstanding shares at the time of the ownership change by the applicable long-term, tax-exempt rate.
−Removed: The applicable long-term tax-exempt rate for ownership changes occurring during the month of March 2022 and August 2021 were 1.63% and 1.58%, respectively.
−Removed: In addition, the Code and related regulations allow the annual limitation to be increased by certain adjustments, which, for us, would primarily relate to certain built-in gains on appreciated assets during the five-year recognition period beginning on the ownership change date.
Interruptions to, or other problems with, our website and interactive user interface, information technology systems, manufacturing processes or other operations could damage our reputation and brand and substantially harm our business.
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Moreover, the business interruption insurance that we carry may not be sufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business that may result from interruptions in our product lines as a result of system failures.
+Added: Our ability to use net operating loss carryforwards may be subject to limitations.
+Added: As of December 31, 2024, we had approximately $222.9 million of gross federal net operating loss carryforwards available to reduce future taxable income.
+Added: Realization of any tax benefit from our carryforwards is dependent on our ability to generate future taxable income and the absence of certain “ownership changes.” An “ownership change,” as defined in the applicable federal income tax rules, could place significant limitations, on an annual basis, on the amount of our future taxable income that may be offset by our carryforwards.
+Added: Such limitations could effectively eliminate our ability to utilize a substantial portion of our carryforwards.
+Added: We have conducted an analysis under Section 382 of the Code to determine whether there would be any limitation on our ability to utilize our tax attributes.
+Added: We have not experienced any limitations on the ability to use these tax attributes as the result of our analysis.
+Added: Other issuances of shares of our Class A Common Stock which could cause an “ownership change” include the issuance of shares of common stock upon future conversion or exercise of outstanding options and warrants or future common stock offerings.
+Added: We continue to analyze any shifts in ownership which may limit our ability to use these tax attributes in the future.
+Added: Changes in tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.
+Added: We are subject to tax laws, regulations and policies of several taxing jurisdictions.
+Added: Changes in tax laws, as well as other factors, could cause us to experience fluctuations in our tax obligations and effective tax rates and otherwise adversely affect our tax positions and results of our operations.
+Added: For example, in August 2022 the United States enacted a 1% excise tax on stock buybacks, which could impact our share repurchase program, and a 15% alternative minimum tax on adjusted financial statement income as part of the Inflation Reduction Act of 2022.
+Added: Furthermore, beginning in 2022, the Code eliminates the right to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize U.S.
+Added: and foreign research and development expenditures over five and fifteen tax years, respectively.
+Added: We have accounted for such changes in accordance with our understanding of guidance available as of the date of this filing as described in more detail in our financial statements.
+Added: Many countries, as well as organizations such as the Organization for Economic Cooperation and Development, have enacted or proposed changes to existing tax laws, including a proposed 15% global minimum tax.
+Added: Any of these developments or changes in U.S.
+Added: federal, state or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results.
+Added: There can be no assurance that our effective tax rates, tax payments or tax credits and incentives will not be adversely affected by these or other developments or changes in law.
We may expand through acquisitions of, or investments in, other companies, each of which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations and harm our business.
Our business strategy may, from time to time, include acquiring or investing in complementary services, technologies or businesses.
−Removed: On December 31, 2021, we purchased all of the outstanding equity interests of iQuue LLC ("iQuue"), and on March 21, 2022, we purchased all of the outstanding equity interests of SightPlan Holdings, Inc.
+Added: On March 21, 2022, we purchased all of the outstanding equity interests of SightPlan Holdings, Inc.
("SightPlan").
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To date, our operations and capital expenditures have been primarily funded by the net proceeds we received through the private issuance of our convertible SmartRent preferred stock, the net proceeds received as a result of the Business Combination, and payments collected from sales to our customers.
+Added: During the year ended December 31, 2024, the Board committed to a strategic investment of $10 million over the next year to accelerate our momentum and deliver the results of our strategic initiatives more quickly.
We may require additional capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances, including the need to develop new products or software or enhance our existing products and software, enhance our operating infrastructure, and acquire complementary businesses and technologies.
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and a combination of confidentiality procedures, contractual provisions and other methods, all of which offer only limited protection.
−Removed: We own one issued U.S.
−Removed: patent, have three pending U.S.
−Removed: patent applications, and three pending provisional patent applications that relate to smart home, security and wireless Internet technologies utilized in our business.
+Added: We own four issued U.S.
+Added: patents, have five pending U.S.
+Added: patent applications, and two pending international patent applications that relate to smart home, security and wireless Internet technologies utilized in our business.
We may file additional patent applications in the future in the U.S.
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We cannot assure you that we will be able to settle any future claims or, if we are able to settle any such claims, that the settlement will be on terms favorable to us.
−Removed: As we continue to expand our hardware and software technology offerings, the likelihood that third parties will claim that we, or our customers, infringe their intellectual property rights may increase.
+Added: As we continue to expand our software and hardware technology offerings, the likelihood that third parties will claim that we, or our customers, infringe their intellectual property rights may increase.
We have in the past received, and may in the future receive, notices of allegations of infringement, misappropriation or misuse of other parties’ proprietary rights.
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• potential challenges to and costs related to implementation and ongoing operation of our intercompany arrangements;
−Removed: increases in U.S.
−Removed: state or federal statutory tax rates on corporate income;
+Added: • increases in state or federal statutory tax rates on corporate income;
• changes in tax laws and regulations and accounting principles, or interpretations or applications thereof;
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Federal, state, and international laws and regulations governing privacy, data protection, and e-commerce transactions require us to safeguard our customers’ personal information.
−Removed: The scope of laws and regulations relating to privacy and cybersecurity is rapidly changing.
+Added: The scope of laws and regulations relating to privacy and cybersecurity is evolving rapidly.
We also maintain privacy policies and other notices, and are subject to contractual obligations to third parties, related to privacy, data protection, and cybersecurity.
We strive to comply with applicable laws, regulations, policies, and other legal obligations relating to privacy, data protection, and cybersecurity.
−Removed: However, the regulatory framework for privacy, data protection, and information security is, and is likely to remain, uncertain for the foreseeable future, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.
+Added: However, the regulatory framework for privacy, data protection, and information security is, and is likely to remain, uncertain for the foreseeable future, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other actual or alleged obligations or our practices.
We also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, and cybersecurity proposed and enacted in various jurisdictions.
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For example, California enacted the CCPA, which affords California resident consumers expanded privacy protections and control over the collection, use and sharing of their personal information.
−Removed: The CCPA went into effect on January 1, 2020 and gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.
+Added: The CCPA went into effect on January 1, 2020 and, among other things, gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.
The CCPA also provides for a private right of action for data breaches that may increase data breach litigation.
−Removed: The CPRA, which significantly amends the CCPA, was adopted by California voters in 2020.
+Added: The CPRA, which significantly amended and supplemented the CCPA, was adopted by California voters in 2020.
The CPRA imposes additional privacy obligations on covered companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data.
−Removed: It also creates a new California agency specifically tasked to enforce the law, which would likely result in increased regulatory scrutiny of California businesses in the areas of privacy and cybersecurity.
+Added: It also creates a new California agency tasked to enforce the law, which is likely to result in increased regulatory scrutiny of California businesses in the areas of privacy and cybersecurity.
The CPRA’s primary substantive requirements went into effect on January 1, 2023.
Following enactment of the CCPA, many other states have adopted or considered privacy legislation, many of which are comprehensive laws similar to the CCPA and CPRA.
−Removed: For example, Virginia, Colorado, Utah, and Connecticut have adopted such legislation that became effective in 2023, Texas, Montana, Oregon, and Florida have adopted such legislation that will become effective in 2024, Delaware, Iowa, and Tennessee have adopted such legislation that will become effective in 2025, and Indiana has adopted such legislation that will become effective in 2026.
+Added: For example, Virginia, Colorado, Utah, and Connecticut have adopted such legislation that became effective in 2023, Texas, Montana, Oregon, and Florida have adopted such legislation that became effective in 2024, Delaware, Iowa, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey and Tennessee have adopted such legislation that has or will become effective in 2025, and Indiana, Kentucky, and Rhode Island have adopted such legislation that will become effective in 2026.
+Added: Numerous U.S.
+Added: states also have considered, and in certain cases enacted, legislation addressing particular subject matter such as biometrics and health-related information.
Broad federal privacy legislation has also been proposed.
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Furthermore, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce, thus violating the FTC Act.
−Removed: With data privacy and security laws and regulations imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so.
−Removed: Any failure or perceived failure by us to comply with our privacy policies, our obligations to our customers, or any of our other actual or asserted legal or contractual obligations relating to privacy, data protection, or security may result in governmental investigations or enforcement actions, claims, demands, and litigation by private parties, claims or public statements against us by consumer advocacy groups or others, and could result in significant fines, penalties, and other liabilities, loss of relationships with key third parties, or cause our customers to lose trust in us, which could lead to a loss of customers and difficulties attracting new customers, all of which could have an adverse effect on our reputation, business, financial condition, and operating results.
+Added: With laws and regulations addressing privacy, data protection, and cybersecurity imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so.
+Added: Any failure or perceived failure by us to comply with our relevant policies, our obligations to our customers, or any of our other actual or asserted legal or contractual obligations relating to privacy, data protection, or cybersecurity may result in governmental investigations or enforcement actions, claims, demands, and litigation by private parties, claims or public statements against us by consumer advocacy groups or others, and could result in significant fines, penalties, and other liabilities, loss of relationships with key third parties, or cause our customers to lose trust in us, which could lead to a loss of customers and difficulties attracting new customers, all of which could have an adverse effect on our reputation, business, financial condition, and operating results.
Furthermore, we may be required to disclose personal data pursuant to demands from individuals, privacy advocates, regulators, government agencies, and law enforcement agencies in various jurisdictions with conflicting privacy and security laws.
5 unchanged sentences
We rely on our own and commercially available systems, software, tools and monitoring to protect against unauthorized use of or access to the information we process and maintain.
−Removed: Our solutions and the networks and information systems we utilize in our business are at risk for security breaches and incidents as a result of third-party action, employee or partner error, malfeasance, or other factors.
+Added: Our solutions and the networks and information systems we utilize in our business are at risk for security breaches and other incidents as a result of third-party action, employee or partner error, technical outages and errors, malfeasance, or other factors.
We have enabled certain employees to work remotely which may make us more vulnerable to cyber-attacks and may create operational or other challenges, any of which could result in disruption or harm to our systems and harm to our business.
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Although we have taken precautionary measures to prepare for these threats and challenges, there is no guarantee that our precautions will fully protect our systems or the data maintained or otherwise processed in our business.
−Removed: Although we have established security procedures designed to protect customers and their resident information, our or our partners’ security and testing measures may not prevent security breaches or incidents.
+Added: Although we have established security procedures designed to protect our information systems and our customers and their resident information, our or our partners’ security and testing measures may not prevent security breaches or other incidents.
Further, advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security, or other developments may result in a compromise or breach of the technology we use to protect customer data, and may result in a security breach or incident.
2 unchanged sentences
Unauthorized intrusion into the portions of our systems and networks and data storage devices that store or otherwise process customer and resident confidential and private information, the loss, corruption, or unavailability of such information or the deployment of ransomware or other malware, or other harmful code, to our services or our networks or systems may result in negative consequences, including the actual or alleged malfunction of our products, software, or services.
−Removed: In addition, third parties, including our third-party partners and other third parties upon which we rely, could also be sources of security risks to us in the event of a failure of their own security systems and infrastructure.
+Added: In addition, third parties, including our third-party partners and other third parties upon which we rely, could also be sources of security risks to us in the event of a failure of their own technology, security systems, or infrastructure.
We engage third-party service providers to store and otherwise process some of our and our customers’ or their residents’ data, including personal, confidential, sensitive, and other information relating to individuals, and for other purposes.
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federal and state authorities, foreign data privacy authorities around the world and private claims by companies or individuals.
−Removed: A cyber-attack may cause additional costs, such as investigative and remediation costs, legal fees, and the costs of any additional fraud detection activities required by law, a court, or a third party.
+Added: A cybersecurity incident may cause additional costs, such as investigative and remediation costs, legal fees, and the costs of any additional fraud detection activities required by law, a court, or a third party.
Any actual, potential or anticipated cyberattacks or other sources of security breaches or incidents also may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees, and engage third-party experts and consultants.
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Although we maintain cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.
−Removed: If we are unable to successfully implement AI to our SmartRent Solutions, our business could be harmed.
+Added: If we are unable to successfully implement AI technology into our SmartRent Solutions, our business could be harmed.
We have incorporated and may continue to incorporate additional AI technology into certain of our SmartRent Solutions, and AI technology may become more important to our operations or to our future growth over time.
We expect to rely on AI to help drive future growth in our business, but there can be no assurance that we will realize the desired or anticipated benefits from AI technology or at all.
−Removed: We may also fail to properly implement or market our use of AI technology.
+Added: We may also fail to properly implement AI technology or to effectively promote our use of it.
Our competitors or other third parties may incorporate AI technology into their products, offerings, and solutions more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Additionally, our use of AI technology may expose us to additional claims, demands, and proceedings by private parties and regulatory authorities and subject us to legal liability as well as brand and reputational harm.
−Removed: For example, if the outputs that our AI technology assists in producing are or are alleged to be deficient, inaccurate, or biased, or if such outputs or their development or deployment, including the collection, use, or other processing of data used to train or create such AI technology, are held or alleged to infringe upon or to have misappropriated third-party intellectual property rights or to violate applicable laws, regulations, or other actual or asserted legal obligations to which we are or may become subject, our business, operating results, financial condition, and growth prospects could be adversely affected.
+Added: For example, if the outputs that our AI technology assists in producing are or are alleged to be deficient, inaccurate, or biased, or if such outputs or their development or deployment, including the collection, use, or other processing of data used to train or develop such AI technology, are held or alleged to infringe upon or to have misappropriated third-party intellectual property rights or to violate applicable laws, regulations, or other actual or asserted legal obligations to which we are or may become subject, our business, operating results, financial condition, and growth prospects could be adversely affected.
The legal, regulatory, and policy environments around AI technology are evolving rapidly, and we may become subject to new and evolving legal and other obligations.
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For example, in 2020 and 2021 we identified a deficiency with batteries contained in certain hardware sold which we acquired from a supplier.
−Removed: As of December 31, 2023 we've accrued $864,000 in hardware cost of goods sold on the Consolidated Statements of Operations related to the battery deficiencies.
+Added: As of December 31, 2023 we accrued $864,000 in hardware cost of goods sold on the Consolidated Statements of Operations related to the battery deficiencies.
+Added: During the year ended December 31, 2024, we determined the battery replacements were complete and released the remaining warranty accrual of $864,000 related to the battery deficiency.
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain senior management and qualified Board members.
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If investors find our Class A Common Stock less attractive as a result of exemptions and reduced disclosure requirements, there may be a less active trading market for our Class A Common Stock and our stock price may be more volatile or decrease.
−Removed: We will cease to be an “emerging growth company” upon the earliest of (i) the first fiscal year following the fifth anniversary of the initial public offering by FWAA (the "FWAA IPO"), which closed on February 9, 2021, (ii) the first fiscal year after our annual gross revenues are $1.235 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year.
+Added: We will cease to be an “emerging growth company” upon the earliest of (i) the first fiscal year following the fifth anniversary of the initial public offering by FWAA, which closed on February 9, 2021, (ii) the first fiscal year after our annual gross revenues are $1.235 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year.
New rules and regulations applicable to public companies may also make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
−Removed: These factors could also make it more difficult for us to attract and retain qualified members of the Company's Board of Directors ("Board"), particularly to serve on our audit committee and compensation committee, and qualified executive officers.
+Added: These factors could also make it more difficult for us to attract and retain qualified members of the Board, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
As a result of disclosure of information in this Report and in filings required of a public company, our business and financial condition is more visible, which may result in more litigation, including by competitors and other third parties.
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From time to time, we may be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business.
−Removed: From time to time, we may be subject to claims, lawsuits, government investigations, and other proceedings involving products liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition.
−Removed: As our business grows, we may see a rise in the number and significance of these disputes and inquiries.
−Removed: Litigation and regulatory proceedings, and particularly the intellectual property infringement matters that we could face, may be protracted and expensive, and the results are difficult to predict.
+Added: We have been and continue to be subject to claims, lawsuits, government investigations, and other proceedings involving products liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition.
+Added: As our business grows, we have seen a rise in the number and significance of these disputes and inquiries.
+Added: For example, during the year ended December 31, 2024, we settled a dispute with a supplier and a collective action that was filed against us by two employees.
+Added: Litigation and regulatory proceedings that we are currently facing or could face, and particularly the intellectual property infringement matters that we could face, may be protracted and expensive, and the results are difficult to predict.
Additionally, our litigation costs could be significant.
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We may not realize the anticipated long-term stockholder value of our stock repurchase program, and any failure to repurchase our Class A common stock after we have announced our intention to do so may negatively impact our stock price.
−Removed: In March 2024, we announced that our board of directors authorized the repurchase of up to $50 million of our Class A common stock from time to time through a stock repurchase program.
+Added: In March 2024, we announced that the Board authorized the repurchase of up to $50 million of our Class A common stock from time to time through a stock repurchase program.
Under our stock repurchase program, we may make repurchases of stock through a variety of methods, including open share market purchases, privately negotiated purchases, entering into one or more confirmations or other contractual arrangements with a financial institution counterparty to effectuate one or more accelerated stock repurchase contracts, forward purchase contracts or similar derivative instruments, Dutch auction tender offers, or through a combination of any of the foregoing, in accordance with applicable federal securities laws.
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Our issuance of additional shares of Class A Common Stock or convertible securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.
−Removed: On October 29, 2021, we filed Form S-8 under the Securities Act to register 35,444,576 shares of our Class A Common Stock or securities convertible into or exchangeable for shares of our Class A Common Stock issued pursuant to our equity incentive plans.
−Removed: The Form S-8 registration statement automatically became effective upon filing.
−Removed: The shares registered under such registration statements are available for sale in the open market.
In the future, we may obtain financing to further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock.
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Future sales, or the perception of future sales, of our Class A Common Stock by us or our existing stockholders in the public market could cause the market price for our common stock to decline.
−Removed: As of December 31, 2023, we had 203,326,820 shares of Class A Common Stock outstanding.
−Removed: The sale of substantial amounts of shares of our Class A Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A Common Stock.
+Added: We may issue additional securities in the future and from time to time.
+Added: Future sales and issuances of shares of our capital stock or rights to purchase our capital stock, including pursuant to our equity incentive plans, could result in substantial dilution to our stockholders, and such sales and issuances, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A Common Stock.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
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These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A Common Stock or other securities.
−Removed: In addition, the shares of our Class A Common Stock issued under the SmartRent, Inc.
−Removed: 2021 Equity Incentive Plan, (the "2021 Plan") are eligible for sale in the public market, subject to provisions relating to various vesting agreements, and in some cases, limitations on volume and manner of sale by affiliates under Rule 144, as applicable.
−Removed: The number of shares reserved for future issuance under the 2021 Plan equals 8,309,956 shares (all of which may be issued pursuant to the exercise of incentive stock options).
−Removed: We also have the ability to issue up to 5,401,824 additional shares of common stock under the Employee Stock Purchase Plan ("ESPP"), subject to annual increases effective as of January 1, 2022 and each subsequent January 1 through and including January 1, 2030 in an amount equal to the smallest of (i) 1% of the number of shares of the common stock outstanding as of the immediately preceding December 31, (ii) 2,000,000 shares or (iii) such amount, if any, as the Board may determine.
Our management has limited experience in operating a public company.
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While we value constructive input from our investors and regularly engage in dialogue with our shareholders regarding our business strategy and performance, shareholder activism, which takes many forms and arises in a variety of situations, has been increasingly prevalent among publicly traded companies.
−Removed: If we become the subject of certain forms of shareholder activism, such a concerted short squeeze, threatened or actual proxy contest or a hostile bid, the attention of our management and our board of directors may be diverted from executing our strategy.
+Added: If we become the subject of certain forms of shareholder activism, such a concerted short squeeze, threatened or actual proxy contest or a hostile bid, the attention of our management and the Board may be diverted from executing our strategy.
Such shareholder activism could give rise to perceived uncertainties as to our future strategy, adversely affect our relationships with business partners and make it more difficult to attract and retain qualified personnel.
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Our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any shareholder activism.
+Added: If we cannot meet the NYSE continued listing requirements, the NYSE may delist our Class A Common Stock.
+Added: Our Class A Common Stock is currently listed on the NYSE.
+Added: In the future, if we are not able to meet the continued listing requirements of the NYSE, our Class A Common Stock may be delisted.
+Added: A delisting of our Class A Common Stock could negatively impact us by, among other things, reducing the liquidity and market price of our Class A Common Stock; reducing the number of investors willing to hold or acquire our Class A Common Stock, which could negatively impact our ability to raise equity financing; decreasing the amount of our news and analyst coverage; and limiting our ability to issue additional securities or obtain additional financing in the future.
+Added: In addition, delisting from the NYSE could have an adverse effect on our business, reputation, financial condition, and operating results.
Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our Class A Common Stock.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.